Employer-sponsored health insurance coverage continues to decline in a new decade

Briefing Paper #353

The current economic environment highlights the degree to which Americans under age 65 rely on a healthy labor market for almost all facets of economic security—particularly access to health care. While the Great Recession officially ended in the summer of 2009, the labor market continued to deteriorate into 2010 and stagnated in 2011. The unemployment rate went from 9.3 percent in 2009 to 9.6 percent in 2010 and then to 8.9 percent in 2011.1

Most Americans, particularly those under age 65, rely on health insurance offered through the workplace. Thus, given these unemployment trends, it comes as no surprise that the share of Americans under age 65 covered by employer-sponsored health insurance (or ESI) eroded for the 11th year in a row in 2011, falling from 58.6 percent in 2010 to 58.3 percent. The situation started deteriorating long before the Great Recession: The share of Americans under age 65 covered by ESI eroded every year from 2000 to 2011, decreasing by a total of 10.9 percentage points. As many as 29 million more people under age 65 would have had ESI in 2011 if the coverage rate had remained at the 2000 level (69.2 percent).

No demographic or socioeconomic group has been spared from the erosion of job-based insurance from 2000 to 2011. Both genders and people of all ages, races, and education levels have suffered declines in employer-based coverage. Workers across the wage distribution, in small and large firms alike, and even those working full time and in white-collar jobs have also lost coverage.

The decline in ESI coverage has been accompanied by an overall decline in health insurance coverage. The number of uninsured non-elderly Americans was 47.9 million in 2011—11.7 million higher than in 2000. The share of non-elderly without insurance increased from 14.7 percent in 2000 to 17.9 percent in 2011. Increasing public insurance coverage, particularly among children, is the only reason the uninsured rate did not rise one-for-one with losses in ESI. In addition, key components in the Patient Protection and Affordable Care Act (also known as health reform) took effect in 2010, shielding young adults from further coverage losses.

This briefing paper begins by documenting the decline in ESI coverage among the entire under-65 population. It then examines at length a smaller subset of this population, workers age 18 to 64—an increasing share of whom have lost ESI as well as other forms of health insurance. It next analyzes declining rates of ESI coverage for children—and argues that if not for public insurance, the overall coverage rate among children would have fallen. This briefing paper then explores the role of the Patient Protection and Affordable Care Act in expanding insurance coverage, particularly among young adults. It concludes by detailing the ESI situation across all 50 states and the District of Columbia.

This report’s central findings include:

In 2011, the share of non-elderly Americans with employer-sponsored health insurance declined for the 11th year in a row, falling from 58.6 percent in 2010 to 58.3 percent. Since the ESI coverage rate in 2000 was 69.2 percent, the total decline from 2000 to 2011 was 10.9 percentage points. In 2011, 14.2 million fewer non-elderly Americans had ESI than in 2000.

As many as 29 million more people under age 65 would have had ESI in 2011 if the ESI coverage rate had remained at its 2000 level.

Workers age 18 to 64 lost job-based coverage, with ESI coverage declining 3.4 percentage points from 2007 (the last business cycle peak) to 2011. Among strongly attached workers (those who worked at least 20 hours per week for at least half the year), service-sector workers had the lowest rates of coverage from their own job and experienced the largest declines from 2007 to 2011. Strongly attached workers in small firms are far less likely to have ESI coverage than those in large firms.

Children’s employer-sponsored insurance coverage (obtained through their parents) fell 12.0 percentage points from 2000 to 2011, and the gap in ESI access for children by income widened substantially over this period.

The decline in ESI coverage from 2000 to 2011 was nationwide, with a statistically significant decrease in non-elderly coverage in all but one state. No state had an increase in the share of its under-65 population with ESI coverage over this period.

The decline in ESI coverage has been accompanied by an overall decline in health insurance coverage. In 2011, 47.9 million people under age 65 were uninsured, 11.7 million more than in 2000.

Workers age 18 to 64 were nearly 30 percent more likely to be uninsured in 2011 than in 2000. Uninsured workers are disproportionately young, Hispanic, less educated, and have lower incomes. The gap between coverage of full-time and part-time workers grew substantially from 2000 to 2011.

Public health insurance is responsible for keeping millions from becoming uninsured, as job-based coverage sharply declined from 2000 to 2011. Public insurance covered 25.0 million more people under age 65 in 2011 than in 2000.

Critical provisions in the Patient Protection and Affordable Care Act, informally known as health reform, have helped offset the declines in ESI coverage by insuring young adults through their parents’ health insurance policies.

Though health reform will substantially insure more Americans (especially as the 2014 insurance exchange provisions take effect), a weak labor market will likely lead to further ESI losses in the next couple of years.

Overall health insurance trends among the entire under-65 population

For the entire under-65 population in the United States, employer-sponsored health insurance remains the predominant form of coverage; 58.3 percent of this population is covered by ESI. However, as shown in Figure A, coverage through work eroded each year from 2000 to 2011, declining by a total of 10.9 percentage points. This is not solely due to unfavorable economic conditions: ESI fell 5.8 percentage points even over the previous full business cycle, from the cycle’s peak in 2000 to its peak in 2007. Declines continued even after the recession ended in 2001 and the economy expanded. These losses in the share of the under-65 population with ESI coverage moderated considerably as the economy finally began adding jobs in 2003, but never reversed. The relatively small declines in coverage over the economic expansion expanded as the recession took hold in 2008 and grew to even larger declines as the unemployment rate soared in 2009 and continued to stay high through 2011.

Figure A

Share of the under-65 population with employer-sponsored health insurance, 2000–2011

Note: Shaded areas denote recessions.

Source: Author's analysis of Current Population Survey Annual Social and Economic Supplement microdata

While for many Americans a loss of ESI means they effectively have no health insurance, the increase in uninsured Americans was not as steep as the fall in ESI (Figure B). In 2011, the share of those under age 65 who were uninsured was 17.9 percent. It increased by 1.8 percentage points from 2007 (when the recession began) to 2010, then fell slightly by 0.5 percentage points from 2010 to 2011. From 2000 to 2011, the uninsured rate rose 3.2 percentage points. In 2011, 47.9 million people under age 65 were uninsured, up by roughly 4.5 million people since the business cycle peak in 2007. The number of uninsured non-elderly Americans was 11.7 million higher in 2011 than it was in 2000.

While the data do not track individuals over time to see what happens to specific people as they lose ESI, it is clear that overall coverage rates would have fallen further had there not been increases in public coverage, including Medicaid, the Children’s Health Insurance Program (CHIP), and Medicare. Public insurance covered 25.0 million more people under age 65 in 2011 than in 2000. As shown in Figure B, public coverage increased 4.2 percentage points from 2007 to 2011 and 8.2 percentage points from 2000 to 2011, partially offsetting losses in ESI. Non-group or direct purchase insurance coverage (not shown) remained relatively flat over the entire period, failing to compensate for the losses in ESI.

Although declines in the share of the under-65 population covered by ESI shrank due to economic growth in the mid-2000s, the losses grew in 2008 as the recession took hold. The steepest declines since the previous peak in 2007 occurred in 2009—a sharp drop of 2.9 percentage points—but the decline continued in 2010 as the unemployment rate continued to rise and even as the unemployment rate fell slightly in 2011. ESI coverage declined 5.1 percentage points between 2007 and 2011 (Table 1). This resulted in a total loss of 10.9 percentage points from 2000 to 2011. Just under a half a million fewer people under age 65 had ESI in 2011 than in 2010; 14.2 million fewer had this coverage in 2011 than in 2000. It is important to note that these numbers fail to show the true extent of the erosion because they ignore population growth from 2000 to 2011. As many as 29 million more people under age 65 would have had ESI in 2011 if the coverage rate had remained at the 2000 level.

Table 1

Employer-sponsored health insurance coverage for the under-65 population, by various characteristics, 2000–2011

Share with ESI

Percentage-point change

2000

2007

2010

2011

2000–2007

2007–2011

2010–2011

2000–2011

Under-65 population

69.2%

63.4%

58.6%

58.3%

-5.8

-5.1

-0.3

-10.9

Age

0–17

66.7%

59.8%

54.8%

54.7%

-6.9

-5.1

-0.1

-12.0

18–24

55.1%

50.1%

45.7%

46.3%

-5.0

-3.8

0.6

-8.8

25–54

73.8%

67.4%

62.2%

61.8%

-6.4

-5.6

-0.4

-12.0

55–64

68.9%

68.0%

64.5%

63.5%

-0.9

-4.5

-1.0

-5.4

Gender

Male

69.1%

63.1%

58.3%

58.3%

-6.0

-4.8

0.0

-10.8

Female

69.3%

63.7%

58.9%

58.4%

-5.6

-5.3

-0.5

-10.9

Race

White, non-Hispanic

76.2%

71.2%

67.1%

66.8%

-5.0

-4.4

-0.2

-9.4

Black, non-Hispanic

57.5%

52.6%

45.5%

46.7%

-4.9

-5.9

1.2

-10.8

Hispanic

47.3%

42.1%

39.4%

38.8%

-5.2

-3.3

-0.6

-8.5

Other

65.8%

62.7%

57.9%

57.4%

-3.1

-5.3

-0.6

-8.4

Nativity

Native born

71.2%

65.6%

60.5%

60.3%

-5.6

-5.3

-0.2

-10.9

Foreign born

53.8%

48.3%

45.9%

45.2%

-5.5

-3.1

-0.7

-8.6

Education*

Less than high school

40.3%

30.8%

28.3%

27.0%

-9.5

-3.8

-1.2

-13.3

High school

66.8%

57.1%

50.6%

50.3%

-9.7

-6.8

-0.3

-16.5

Some college

74.1%

67.5%

60.8%

59.8%

-6.6

-7.7

-0.9

-14.3

College

83.9%

80.3%

76.7%

76.5%

-3.6

-3.8

-0.2

-7.4

Post-college

88.0%

85.8%

83.9%

83.7%

-2.2

-2.1

-0.2

-4.3

Household income fifth

Bottom

29.2%

22.1%

15.6%

15.8%

-7.1

-6.3

0.2

-13.4

Second

63.1%

54.1%

44.7%

43.1%

-9.0

-11.0

-1.6

-20.0

Middle

78.1%

72.2%

67.0%

65.7%

-5.9

-6.5

-1.3

-12.4

Fourth

86.7%

82.5%

80.4%

80.4%

-4.2

-2.1

0.0

-6.3

Top

89.2%

87.3%

85.5%

86.9%

-1.9

-0.4

1.4

-2.3

* Education reflects own education for individuals 18 and older and reflects family head’s education for children under 18.

Source: Author's analysis of Current Population Survey Annual Social and Economic Supplement microdata

Coverage losses occurred across all age groups, but young adults (age 18–24) consistently have the lowest rates of coverage. Less than half of this group receives health insurance through the workplace—though the Patient Protection and Affordable Care Act has stemmed these losses since 2010, when the provision allowing young adults to stay on or join their parents’ ESI took effect. (For more on this, see the Health reform and coverage among young adults section of this briefing paper.)

The greatest declines in ESI were among children (age 0–17) and prime-working-age adults (age 25–54), both with a 12.0 percentage-point drop from 2000 to 2011. Coverage declined for males and females alike and across racial and ethnic classifications. As depicted in Figure C, racial and ethnic disparities in coverage have persisted over time, with non-Hispanic whites in 2011 experiencing rates of ESI coverage 72 percent higher than those of Hispanics and 43 percent higher than those of blacks. Table 1 shows that ESI coverage among the native born is 34 percent higher than among the foreign born, though the native born experienced larger losses since the last business cycle peak in 2007.

Figure C

Share of the under-65 population with employer-sponsored health insurance, by race and ethnicity, 2000, 2007, 2011

Source: Author's analysis of Current Population Survey Annual Social and Economic Supplement microdata

Educational attainment is correlated strongly with employer-based coverage; those with advanced degrees are three times more likely to have ESI than those with less than a high school education.2 Just over half (50.3 percent) of those with a high school degree but no additional education have job-based coverage, compared with more than three-fourths (76.5 percent) of those with a college degree but no additional education.

As with education, higher household incomes are strongly associated with an increased likelihood of having employer-sponsored insurance coverage. In 2011, only 15.8 percent of those with household incomes in the bottom fifth had ESI, compared with 86.9 percent of those in the top fifth—a five-and-a-half-fold difference in the likelihood of being insured through work. Each income group experienced losses from 2000 to 2011; however, the declines were much greater for those at the bottom of the income scale. Those in the second-lowest fifth fared the worst following the onset of the recession, experiencing a decline of 11.0 percentage points from 2007 to 2011, and a total decline of 20.0 percentage points from 2000 to 2011. While in percentage-point terms the bottom fifth fell less far than the second-lowest fifth from 2000 to 2011 (13.4 percentage points versus 20.0 percentage points), the rate of coverage for the bottom fifth fell 46 percent over this period, compared with 32 percent for the second-lowest fifth and 3 percent for the top fifth.

Declining coverage for workers age 18 to 64

After having documented the decline in ESI coverage among the entire under-65 population, this briefing paper will now examine a smaller subset of this population: workers age 18 to 64. It first details the decline in ESI among these workers; it then examines the increase in the share of these workers without any form of health insurance, ESI or otherwise.

Employer-sponsored health insurance

Employer-sponsored health insurance coverage is higher among workers age 18 to 64 (68.2 percent) than among the under-65 population in general (58.3 percent). As shown in Table 2, workers’ declines in coverage have also been smaller—7.6 percentage points from 2000 to 2011 (compared with 10.9 percentage points for the entire under-65 population) and 3.4 percentage points from 2007 to 2011 (compared with 5.1 percentage points). The most recent trends are unsurprising given that ESI is secured via work; therefore, when workers lose employment, they often lose the health coverage that goes with it (unless they keep insurance as a retiree or a spouse, or never had it in the first place). However, coverage also fell by 4.2 percentage points over the full business cycle from 2000 to 2007, increasing in only one year, from 2006 to 2007 as the economy expanded. Therefore, the 3.4 percentage-point decline from 2007 to 2011 can be attributed partially to the start of the recession in December 2007 and partially to the overall trend of declining coverage.

Table 2

Employer-sponsored health insurance coverage for workers 18–64 years old, by various characteristics, 2000–2011

Share with ESI

Percentage-point change

2000

2007

2010

2011

2000–2007

2007–2011

2010–2011

2000–2011

All workers

75.8%

71.6%

68.5%

68.2%

-4.2

-3.4

-0.3

-7.6

Gender

Male

74.8%

69.9%

67.1%

67.2%

-4.9

-2.7

0.1

-7.6

Female

76.8%

73.4%

70.1%

69.4%

-3.4

-4.0

-0.7

-7.4

Race

White, non-Hispanic

80.4%

76.8%

74.2%

74.1%

-3.6

-2.7

-0.1

-6.3

Black, non-Hispanic

69.8%

66.7%

61.4%

62.6%

-3.1

-4.1

1.2

-7.2

Hispanic

55.2%

50.8%

48.9%

48.0%

-4.4

-2.8

-0.9

-7.2

Other

72.0%

70.4%

67.0%

66.8%

-1.6

-3.6

-0.2

-5.2

Nativity

Native born

78.3%

74.6%

71.4%

71.4%

-3.7

-3.2

-0.1

-6.9

Foreign born

60.4%

54.9%

53.3%

52.2%

-5.5

-2.7

-1.2

-8.2

Education

High school

73.2%

66.2%

61.8%

61.5%

-7.0

-4.7

-0.3

-11.7

College

85.9%

83.1%

80.0%

80.0%

-2.8

-3.1

0.0

-5.9

Wage fifth*

Bottom

51.2%

46.0%

40.9%

41.3%

-5.2

-4.8

0.4

-10.0

Second

70.2%

63.2%

59.4%

57.9%

-6.9

-5.3

-1.4

-12.2

Middle

81.6%

78.0%

74.8%

74.5%

-3.6

-3.5

-0.3

-7.1

Fourth

87.4%

84.8%

82.7%

82.4%

-2.6

-2.4

-0.3

-5.0

Top

89.1%

86.1%

85.1%

85.4%

-3.0

-0.7

0.3

-3.7

Work time

Full-time

78.6%

74.8%

73.2%

72.9%

-3.8

-1.9

-0.4

-5.7

Part-time

61.6%

55.5%

49.3%

49.1%

-6.1

-6.4

-0.2

-12.5

* For methodology of construction of wage fifths, see Gould (2010).

Source: Author's analysis of Current Population Survey Annual Social and Economic Supplement microdata

Male workers have slightly lower rates of ESI coverage than female workers (67.2 percent versus 69.4 percent), but women experienced larger declines from 2007 to 2011. Similar to the overall under-65 population, large disparities exist in ESI coverage for workers by race and ethnicity. Nearly three-fourths of white non-Hispanic workers are covered, compared with less than half of Hispanic workers. Racial disparities in coverage widened since the last business cycle peak in 2007; the coverage rate for white non-Hispanic workers declined 2.7 percentage points from 2007 to 2011, in contrast to a 4.1 percentage-point decline for black non-Hispanic workers. While black workers have higher rates of coverage than Hispanic workers, both fell the same amount from 2000 to 2011: 7.2 percentage points.

Native-born workers are 37 percent more likely to be covered than foreign-born workers, and the coverage gap between 2000 and 2011 widened to 19.2 percentage points.

Workers with a four-year college degree (but no additional education) have far higher rates of employment-based coverage than workers with a high school degree (but no additional education), at 80.0 percent and 61.5 percent, respectively. In addition, from 2000 to 2011, high school–educated workers experienced declines nearly twice as large as those of workers with a college degree (11.7 percentage points versus 5.9 percentage points).

Workers earning lower hourly wages are significantly less likely to have employer-sponsored health insurance than those earning higher wages; however, even those at the high end of the wage scale experienced declines in coverage over 2000–2011.3 Only 41.3 percent of those in the bottom fifth, making at or below $9.62 an hour, have ESI, while 85.4 percent of those in the top fifth, with hourly earnings at or above $30.77, have coverage. Disparities in coverage by wage levels widened over 2000–2011, with those in the top wage fifth being 74 percent more likely to be covered than those in the bottom fifth in 2000, but 107 percent more likely in 2011.

Full-time workers have ESI at far higher rates than part-time workers (72.9 percent versus 49.1 percent). Furthermore, part-time workers experienced a sharper decline in coverage since the start of the recession, with a decrease of 6.4 percentage points from 2007 to 2011. Over 2000–2011, their coverage fell 12.5 percentage points. The gap between full-time and part-time workers grew from 17 percentage points in 2000 to nearly 24 percentage points in 2011.

* To qualify as employer-sponsored health insurance coverage, workers must receive employer-sponsored health insurance through their own job, and employer must pay at least part of their insurance premiums.

** Defined as private-sector wage and salary workers, age 18–64, who worked at least 20 hours per week and 26 weeks per year

*** Industry classification changes make it impossible to compare 2011 with years earlier than 2002.

Source: Author's analysis of Current Population Survey Annual Social and Economic Supplement microdata

An important group of workers to examine more closely are those who are strongly attached to the private-sector labor force (i.e., those who work at least 20 hours per week and 26 weeks per year). Table 3 displays coverage for strongly attached workers who receive insurance through their own job (that is, not as a dependent receiving coverage via a spouse or parent) from 2000 to 2011 by selected job characteristics.4 Coverage for these workers fell 3.5 percentage points over the full business cycle from 2000 to 2007. After an increase in the coverage rate between 2004 and 2007, coverage for these workers fell again for four years in a row, declining by 3.1 percentage points from 2007 to 2011. In 2011, only 52.3 percent of these steady workers received health insurance from their employer, down 6.6 percentage points from 2000.

Strongly attached service-sector workers are insured through their own jobs at less than half the rate of both white-collar and blue-collar workers. Service-sector workers experienced the largest drop in coverage from 2007 to 2011 (5.4 percentage points) and throughout 2000–2011 (9.9 percentage points).

Workers in larger firms are more likely to receive health insurance from their own employer than workers in smaller firms. Only 24.6 percent of strongly attached workers in the smallest firms (with fewer than 10 employees) have ESI from their own job, compared with 42.0 percent in firms with 10 to 99 employees, 59.8 percent in firms with 100 to 499 workers, and more than 62 percent in firms with 500 or more employees. Coverage losses from 2007 to 2011 and over 2000–2011 were greatest among workers in smaller firms (with 10–99 workers).

Low coverage rates among workers in small firms are due to many factors that make purchasing insurance much more expensive for small businesses than for larger firms, including an inability to offer attractive risk pools to potential insurers, high administrative costs, and little competition in insurer markets (Gould and Hertel-Fernandez 2009). With the passage of the Patient Protection and Affordable Care Act in 2010, very small, low-wage firms could see considerable reductions in their premiums with the use of new tax credits. It is not clear from the data in this briefing paper how these new tax credits, which came into effect in 2010, affected coverage rates for workers at the smallest firms because there were too many moving parts in the economy to accurately measure the counterfactual.

In 2014, all small firms will be able to purchase insurance though new insurance exchanges, which will make insurance costs more stable and predictable, even if one or more of their workers require(s) medical care or if their workforce size or composition changes from one year to the next.

Coverage rates in 2011 differ dramatically according to what sector of the economy strongly attached workers were employed in, ranging from 71.4 percent in the mining industry to 22.8 percent in the agriculture, forestry, fishing, and hunting industry. Overall, the highest rates of coverage are found in mining; manufacturing; and information; and the lowest in agriculture, forestry, fishing, and hunting; arts, entertainment, recreation, and accommodation; and other services (except public administration). However, all industries experienced declines from 2002 to 2011.5 The largest declines were in the sector with the lowest percent insured, agriculture, forestry, fishing, and hunting—with a 14.3 percentage-point decline in employer-sponsored insurance coverage. The smallest declines between 2002 and 2011 were in the finance, insurance, and real estate and leasing industry, with a drop of 0.3 percentage points.

In addition, previous research has shown that certain industries, such as public administration, mining, and manufacturing, are more likely to offer coverage to workers’ spouses or children, whereas arts and professional services fall short in this regard (Bivens, Gould, and Hertel-Fernandez 2009). In other words, the likelihood of receiving dependent coverage is higher among industries with higher rates of worker coverage.

Uninsured workers

Declines in ESI among workers tend to translate into growing numbers of workers without any type of health insurance. Uninsured workers are increasingly common in the U.S. economy; nearly one-fifth of the workforce was uninsured in 2011 (Table 4). While there was a slight decline in the share of workers uninsured between 2010 and 2011, workers age 18 to 64 were still nearly 30 percent more likely to be uninsured in 2011 than in 2000.

Table 4

Share of workers 18–64 years old without health insurance, by various characteristics, 2000–2011

Share uninsured

Percentage-point change

2000

2007

2010

2011

2000–2007

2007–2011

2010–2011

2000–2011

All workers

15.0%

17.5%

19.5%

19.3%

2.5

1.8

-0.2

4.3

Age

18–24

24.3%

26.5%

26.8%

25.1%

2.2

-1.4

-1.7

0.8

25–34

18.7%

22.4%

25.5%

25.3%

3.7

2.9

-0.2

6.6

35–44

13.2%

16.4%

19.2%

18.8%

3.2

2.4

-0.4

5.6

45–54

9.7%

13.3%

15.4%

15.7%

3.6

2.4

0.3

6.0

55–64

9.6%

10.3%

12.5%

12.9%

0.7

2.6

0.4

3.3

Gender

Male

16.9%

19.9%

21.9%

21.4%

3.0

1.5

-0.5

4.5

Female

12.8%

14.7%

16.9%

17.1%

1.9

2.4

0.2

4.3

Race

White, non-Hispanic

10.4%

12.2%

13.9%

13.7%

1.8

1.5

-0.2

3.3

Black, non-Hispanic

19.9%

22.0%

25.0%

23.8%

2.1

1.8

-1.3

3.9

Hispanic

36.1%

38.9%

39.6%

39.9%

2.8

1.0

0.2

3.8

Other

18.8%

18.2%

20.9%

20.0%

-0.6

1.8

-0.8

1.2

Nativity

Native born

12.3%

14.4%

16.3%

16.1%

2.1

1.7

-0.3

3.8

Foreign born

31.7%

34.5%

35.8%

36.0%

2.8

1.5

0.1

4.3

Education

Less than high school

37.9%

44.5%

46.1%

45.9%

6.6

1.4

-0.2

8.0

High school

17.9%

23.0%

25.9%

25.6%

5.1

2.6

-0.3

7.7

Some college

11.6%

14.4%

17.7%

17.8%

2.8

3.4

0.1

6.2

College

6.8%

8.0%

10.1%

9.9%

1.2

1.9

-0.1

3.1

Post-college

3.4%

4.4%

5.2%

5.6%

1.0

1.2

0.4

2.2

Wage fifth*

Bottom

31.1%

34.1%

37.7%

36.7%

3.0

2.6

-1.0

5.6

Second

19.7%

24.6%

26.7%

27.1%

4.9

2.5

0.4

7.4

Middle

11.6%

13.8%

16.0%

15.6%

2.2

1.8

-0.4

4.0

Fourth

7.1%

8.5%

9.8%

10.1%

1.4

1.6

0.3

3.0

Top

5.2%

6.2%

7.1%

6.9%

1.0

0.7

-0.1

1.8

Work time

Full-time

14.3%

16.5%

17.5%

17.3%

2.2

0.8

-0.2

3.0

Part-time

18.3%

22.6%

27.6%

27.5%

4.3

4.9

0.0

9.2

* For methodology of construction of wage fifths, see Gould (2010).

Source: Author's analysis of Current Population Survey Annual Social and Economic Supplement microdata

The share of uninsured workers increased more during the full business cycle from 2000 to 2007 (increasing 2.5 percentage points) than it did in the recession that began in December 2007 (increasing 1.8 percentage points from 2007 to 2011). The total increase in the share of workers uninsured from 2000 to 2011 was 4.3 percentage points, representing 6.6 million more uninsured workers.

Older workers (age 55–64) are more likely to have coverage than any other age group, with only 12.9 percent lacking insurance—while more than one-fourth of younger workers (age 18–34) are uninsured. Working men are more likely to be uninsured than working women (21.4 percent versus 17.1 percent). White non-Hispanic workers are far less likely to be uninsured than black and Hispanic workers, with 13.7 percent of whites lacking insurance, compared with 23.8 percent of blacks and 39.9 percent of Hispanics. Native- and foreign-born workers alike saw increases in uninsurance rates over 2000–2011, though foreign-born workers are uninsured at more than twice the rate of native-born workers.

Table 5

Characteristics of workers 18–64 years old, all versus uninsured, 2011

All workers

Uninsured workers

Age

18–24

13.2%

17.1%

25–34

22.8%

29.8%

35–44

22.5%

21.9%

45–54

24.1%

19.5%

55–64

17.4%

11.7%

Gender

Male

52.5%

58.0%

Female

47.5%

42.0%

Race

White, non-Hispanic

66.2%

46.9%

Black, non-Hispanic

10.8%

13.3%

Hispanic

15.6%

32.2%

Other

7.4%

7.7%

Nativity

Native born

83.6%

69.4%

Foreign born

16.4%

30.6%

Education

Less than high school

8.8%

20.9%

High school

27.5%

36.5%

Some college

30.5%

28.1%

College

21.9%

11.3%

Post-college

11.2%

3.3%

Wage fifth*

Bottom

20.0%

38.1%

Second

20.0%

28.1%

Middle

20.0%

16.1%

Fourth

20.0%

10.5%

Top

20.0%

7.2%

Work time

Full-time

80.2%

72.2%

Part-time

19.8%

27.8%

* For methodology of construction of wage fifths, see Gould (2010).

Source: Author's analysis of Current Population Survey Annual Social and Economic Supplement microdata

Nearly half of workers without a high school degree are uninsured, compared with about one-fourth of those with a high school degree (but no additional education) and one-tenth of those with a college degree (but no additional education). While these levels illustrate clear inequities, the gap in coverage rates among workers of different education levels grew substantially over 2000–2011. Workers without a high school degree or with a high school degree but no additional education experienced larger increases in their ranks of uninsured (rising 8.0 and 7.7 percentage points, respectively) than did those with a college degree or post-college education (3.1 and 2.2 percentage points, respectively).

Nearly one-third of all workers in the bottom 40 percent of the wage distribution are uninsured, compared with less than one-eleventh of workers in the top 40 percent. About 3.9 million additional workers in the bottom 40 percent were uninsured in 2011 compared with 2000, while only 1.4 million additional workers in the top 40 percent were uninsured over the same period. At the extremes, 36.7 percent of workers in the bottom fifth were uninsured, while only 6.9 percent of workers in the top fifth were. Thus, workers in the bottom fifth are over five times more likely to be uninsured than are workers in the top fifth. While public insurance is designed to cover children who lose access to employer-sponsored insurance, it is clear that workers generally do not enjoy the same safety net.

Part-time workers are more likely to be uninsured than full-time workers, and that gap in access to coverage has grown over time. Part-time workers were 28 percent more likely to be uninsured in 2000, but 59 percent more likely to be uninsured in 2011. Over 2000–2011, lack of insurance coverage grew 3.0 percentage points among full-time workers and 9.2 percentage points among part-time workers. The introduction of insurance exchanges and their accompanying subsidies as part of health reform in 2014 should provide an alternative to workers, particularly part-time workers, who do not have health insurance through their job.

Table 5 examines the uninsured workforce side-by-side with the workforce as a whole in 2011. Uninsured workers are disproportionately young. Workers age 18–34 make up 36.0 percent of the total workforce yet 47.0 percent of the uninsured workforce. In addition, working men are more likely to be uninsured than working women. Disparities among the working uninsured are stark by race and ethnicity. Whereas Hispanics make up only 15.6 percent of the total workforce, they represent 32.2 percent of the uninsured workforce. A similar trend is found by nativity: While the foreign born account for 16.4 percent of the overall workforce, they represent 30.6 percent of the uninsured workforce.

Insurance coverage among workers rises consistently with increased educational attainment. Workers with a high school education or less represent 36.3 percent of the workforce, yet they make up 57.4 percent of uninsured workers. Those with a college degree or higher represent nearly one-third of the workforce, yet less than one-sixth of those uninsured.

The starkest disparities occur at different points in the wage distribution. When the workforce is equally divided by wage into fifths (see Gould 2010 for methodology), it is clear that those at the bottom end of the distribution are far more likely to be uninsured than those at the top. Workers in the bottom two-fifths by definition represent 40 percent of the workforce, but represent about two-thirds of the uninsured. By contrast, the top two-fifths, again 40 percent of workers, represent only 17.7 percent of the uninsured.

Table 6

Employer-sponsored health insurance coverage for population under age 18, by various characteristics, 2000–2011

Share with ESI

Percentage-point change

2000

2007

2010

2011

2000–2007

2007–2011

2010–2011

2000–2011

All under 18

66.7%

59.8%

54.8%

54.7%

-6.9

-5.1

-0.1

-12.0

Race

White, non-Hispanic

76.8%

71.1%

67.3%

67.0%

-5.7

-4.1

-0.3

-9.8

Black, non-Hispanic

52.6%

46.3%

38.6%

40.1%

-6.3

-6.2

1.5

-12.5

Hispanic

44.0%

38.2%

35.5%

35.3%

-5.8

-2.9

-0.2

-8.7

Other

65.9%

61.2%

56.2%

56.3%

-4.7

-4.9

0.1

-9.6

Nativity

Native born

67.7%

60.6%

55.5%

55.3%

-7.1

-5.3

-0.2

-12.4

Foreign born

46.3%

39.6%

37.4%

39.2%

-6.7

-0.4

1.9

-7.1

Education of family head

Less than high school

35.5%

23.2%

20.6%

18.8%

-12.3

-4.4

-1.8

-16.7

High school

64.4%

52.2%

44.9%

44.2%

-12.2

-8.0

-0.7

-20.2

Some college

74.2%

66.0%

58.1%

56.9%

-8.2

-9.1

-1.2

-17.3

College

85.9%

82.2%

79.5%

79.2%

-3.7

-3.0

-0.2

-6.7

Post-college

88.0%

86.3%

84.3%

85.9%

-1.7

-0.4

1.5

-2.1

Family income fifth

Bottom

25.1%

17.2%

13.4%

13.5%

-7.9

-3.7

0.2

-11.6

Second

56.0%

42.5%

33.7%

32.4%

-13.5

-10.1

-1.3

-23.6

Middle

75.8%

68.4%

60.7%

59.6%

-7.4

-8.8

-1.2

-16.2

Fourth

87.1%

82.7%

80.5%

80.0%

-4.4

-2.7

-0.4

-7.1

Top

89.8%

88.2%

85.8%

88.5%

-1.6

0.3

2.6

-1.3

Source: Author's analysis of Current Population Survey Annual Social and Economic Supplement microdata

Declining ESI coverage for children

Second to young adults (age 18–24), children under 18 have the lowest rates of ESI coverage of the under-65 population, at 54.7 percent (Table 6). Coverage shares for children fell every year from 2000 to 2011, resulting in an overall decline of 12.0 percentage points. In 2011, 7.7 million fewer children had ESI than in 2000, without even taking into account the growth of the under-18 population throughout this period. As many as 8.9 million more children would have had ESI in 2011 if the coverage rate had remained at the 2000 level.

As with the under-65 population as a whole, there are stark disparities in ESI coverage for children. White non-Hispanic children have coverage rates nearly as high as the rate for overall workers (67.0 percent), and almost double the rate of Hispanic children (35.3 percent). Black non-Hispanic children experienced the largest losses from 2007 to 2011 (6.2 percentage points) and from 2000 to 2011 (12.5 percentage points). Native-born children experienced greater losses than did foreign-born children over 2000–2011, yet their coverage rates are still far higher (55.3 percent versus 39.2 percent).

Children’s coverage is highly correlated with the education of the family head. Less than half of children of parents with a high school degree (but no additional education) have ESI, compared with about four-fifths of children of parents with at least a college degree. Fewer than 1 in 5 children of a family head with less than a high school education has ESI. Similarly, access to ESI is closely tied to family income (Figure D). While children across the economic spectrum experienced losses in coverage over 2000–2011, disparities have widened. The gap between the top fifth and bottom fifth grew 10.2 percentage points over the period, while the gap between the second and fourth fifths grew by 16.5 percentage points.

Figure D

Share of population under age 18 with employer-sponsored health insurance, by family income fifth, 2000, 2007, 2011

Source: Author's analysis of Current Population Survey Annual Social and Economic Supplement microdata

While losses in ESI from 2000 to 2011 were greater among children than among non-elderly adults, the share of children without any coverage actually fell, as shown in Figure E. The uninsured rate for children fell 1.3 percentage points, while the share of uninsured non-elderly adults rose 4.8 percentage points from 2000 to 2011. Given that the share of children and non-elderly adults covered by privately purchased, or non-group, insurance coverage was relatively flat over this period (not shown), the differences in the overall coverage rates are primarily due to differences in the incidence of public insurance for these groups.

The share of children with public coverage grew 14.6 percentage points from 2000 to 2011, compared with an increase of only 6.0 percentage points for the non-elderly adult population. While both increases lessened the impact of ESI losses on overall coverage rates, only the increase in public coverage for children was large enough to be fully offsetting. Children have greater access to public insurance through CHIP, but eligibility for public insurance for non-elderly adults is mostly limited to Medicaid or Medicare (e.g., for the disabled).

Some claim that the losses in ESI were actually driven by increases in public coverage eligibility or generosity, a phenomenon known as “crowd-out.” However, given the economic downturn that began in 2007, it is likely that an increasing number of children became eligible for public insurance rather than public coverage replacing private coverage. That ESI coverage rates for adults fell without the same counterbalancing rise in public coverage further reinforces this idea. Regardless of the cause, it is clear that if not for public insurance, the overall coverage rate among children would have fallen.

Health reform and coverage among young adults

In 2010, several elements of the Patient Protection and Affordable Care Act took effect. These provisions include reforms to the insurance market, tax credits to help small businesses provide insurance to their workers, and a stipulation allowing adults younger than age 26 to stay on or join their parents’ employer-sponsored health insurance policy. While the success of other provisions may be difficult to track, it is relatively easy to illustrate the success of health reform with regard to the young adult provision.

Figure F

Change in employment rate and employer-sponsored health insurance (total and as a dependent), by age group, 2009–2011

Source: Author's analysis of Current Population Survey and Current Population Survey Annual Social and Economic Supplement microdata

Figure F compares changes in the employment rate and the rate of employer-sponsored health insurance coverage for various age groups between 2009 and 2011. Employment rates fell for each group, with the largest declines among young adults between 19 and 25 years old.6 At the same time, for most groups, overall employer-sponsored health insurance coverage rates (which include those with ESI through their own job, as well as those receiving coverage as a dependent) also fell. This is not surprising given that most people find health insurance on the job. Declines, though generally smaller, were also found in the share receiving ESI coverage as a dependent among every age group except one—the 19–25 cohort.

It’s important to note this exception. Given the close relationship between labor market outcomes and employer-sponsored insurance, we would expect declines in coverage for all groups. What we see instead is that employer-sponsored health insurance actually increased among young adults. This is because the coverage rate rose particularly dramatically among young adults who had ESI as a dependent, the very type of coverage the provision should have affected.

While this provision appears to improve the low coverage rates for 19- to 25-year-olds, coverage for young adults through this avenue is dependent on parental coverage, which has suffered in recent years and is more likely to be secured by those with higher incomes. Thus, in a struggling economy, fewer young adults will be able to secure coverage through their parents. Furthermore, young adults whose parents do not have the advantage of ESI (disproportionately non-whites and/or those with less education and/or lower incomes) will not be able to take advantage of this provision.

ESI across the states

The non-elderly population across the country relies on ESI as the primary form of coverage; however, the incidence of coverage varies widely from state to state. Table 7 compares ESI coverage rates for the entire under-65 population across states between 2000/2001 and 2010/2011.

New Hampshire has the highest rate of ESI coverage among the under-65 population, at 72.0 percent in 2010/2011. It is followed by Massachusetts (70.5 percent), Connecticut (69.8 percent), Minnesota (68.7 percent), Utah (68.6 percent), and Maryland (67.4 percent). In contrast, less than half of both New Mexico’s and Louisiana’s non-elderly population have ESI, at 47.6 percent and 49.7 percent, respectively.

Across the country, on average, ESI coverage for the under-65 population fell 10.0 percentage points from 2000/2001 to 2010/2011. Nineteen states experienced losses in excess of 10 percentage points over the period. The largest declines in coverage occurred in South Carolina, Michigan, Nevada, Georgia, and Ohio each with losses of at least 13 percentage points. Forty-nine states plus the District of Columbia had statistically significant losses in coverage rates for their under-65 population, while no state had a rise in the share of its under-65 population with ESI coverage over that period.7

In terms of ESI coverage for workers age 18 to 64, Massachusetts, Hawaii, and Connecticut have the highest coverage rates, at 79.6 percent, 77.4 percent, and 77.4 percent, respectively (Table 8). This is not particularly surprising for Massachusetts and Hawaii, as both states have mandates requiring that employers provide at least minimal insurance coverage to their workers. The lowest rate of worker coverage is in Montana (57.9 percent), followed by New Mexico (58.4 percent), California (62.4 percent), and Texas (62.7 percent). The largest declines in job-based coverage among workers from 2000/2001 to 2010/2011 occurred in South Carolina, Michigan, and Georgia, each with losses in excess of 11 percentage points, far above the national average decrease of 7.0 percentage points.

When looking at ESI coverage for children, New Hampshire again leads the country, with a coverage rate of 72.6 percent (Table 9). Massachusetts, Minnesota, and Utah follow, at 69.7 percent, 68.3 percent, and 68.2 percent, respectively. At the other end of the spectrum, nine states and Washington, D.C., have ESI coverage rates among children of less than 50 percent. Louisiana has the lowest rate of coverage for children, at 41.6 percent, followed by New Mexico (42.9 percent), Washington, D.C. (44.2 percent), and Mississippi (44.3 percent).

As is the case nationwide, losses in coverage across the states are greatest among children. Twenty-six states and Washington, D.C., had declines from 2000/2001 to 2010/2011 in excess of 10 percentage points. South Carolina had the greatest losses in children’s ESI coverage (16.7 percentage points), followed by Louisiana (16.4 percentage points), and Indiana (15.9 percentage points). Overall, 46 states and Washington, D.C., had statistically significant declines in children’s ESI coverage rates. No state had a statistically significant increase.

Conclusion

Employer-sponsored health insurance is increasingly failing American families. If the coverage rate had not fallen 10.9 percentage points as it did from 2000 to 2011, as many as 29 million more people under age 65 would have had ESI in 2011. Public insurance, primarily in the form of Medicaid and CHIP, has helped counteract this trend. However, many Americans, particularly those of working age, are falling through the cracks. Fortunately, the young adult provision in the Patient Protection and Affordable Care Act has partially mitigated the trend, insuring an increasing share of that group since it took effect in 2010.

In the future, other major elements of health reform—particularly the provisions establishing health insurance exchanges and the accompanying subsidies, which will come into effect in 2014—will make it easier and more affordable for Americans to secure and maintain health insurance coverage. Unfortunately, the continued weak labor market, with its inadequate job creation and the accompanying limited bargaining power of workers, will likely lead to further losses in employer-sponsored insurance coverage before major relief from health reform materializes.

—Elise Gould joined the Economic Policy Institute in 2003. Her research areas include employer-sponsored health insurance, inequality and health, poverty, mobility, and the employer tax exclusion. She has published her research in a range of venues from academic journals to general audience periodicals, been quoted by various news sources, and testified before the U.S. Congress. Also, she teaches health economics and econometrics to graduate students at Johns Hopkins University and The George Washington University, respectively. She holds a master’s in public affairs from the University of Texas-Austin and a Ph.D. in economics from the University of Wisconsin-Madison.

—The author thanks Jin Dai, Nicholas Finio, and Natalie Sabadish for their valuable research assistance. EPI is grateful to the Open Society Foundations and Ford Foundation for providing support for the research and publication of this report.

Endnotes

1. Measures of labor market health besides the official unemployment rate show much less improvement than the unemployment rate in 2011 would suggest. Much of the improvement in the unemployment rate was actually due to a drop in labor force participation rather than an increase in employment.

2. The results under the education heading in Table 1 assign each child the education level of their family head, as children under age 18 rarely complete their education by that time.

3. See Gould (2010) for a discussion of wage quintile analysis and balancing fifths.

4. In this section, to qualify as employer-sponsored health insurance coverage, workers must receive employer-sponsored health insurance through their own job, and employers must pay at least part of their insurance premiums.

5. Changes in industry classification make it impossible to compare 2010 with years earlier than 2002.

6. Elsewhere in this paper, “young adults” are defined as 18- to 24-year-olds. In this section on health reform, young adults refer to 19- to 25-year-olds to best capture those most directly affected by this particular provision.

7. The second set of numbers in Table 7 displays the number of people with ESI in both sets of years, including the difference between the years. Declining coverage rates accompanied by increases in the number insured reflect the fact that the increases did not keep pace with population growth. Another analysis would be to compare the absolute level of people with coverage in the latter period with the level that would have occurred had the rate remained the same as in the earlier period (i.e., multiplying the population in the latter period by the coverage rate in the earlier period). The same fundamental point also applies to Table 8 and Table 9.

Current Population Survey Annual Social and Economic Supplement microdata. Various years. Survey conducted by the Bureau of the Census for the Bureau of Labor Statistics [machine-readable microdata file]. Washington, D.C.: U.S. Census Bureau. http://www.bls.census.gov/ftp/cps_ftp.html#cpsmarch

Current Population Survey Labor Force Statistics. Various years. Labor Force Statistics Including the National Unemployment Rate [database accessed through “one-screen data search tab”]. http://www.bls.gov/cps/#data

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